Bucking a weak trend in Indian stocks, the rupee on Thursday surged by 22 paise to close at a fresh three-week high of 61.75 against the US currency on persistent selling of dollars by banks and exporters.
Debt-related inflows also continued to support the rupee which rose for the third straight session, said forex brokers. The rupee opened higher at 61.93 per dollar as against the Wednesday's closing level of 61.97 per dollar at the Interbank Foreign Exchange (Forex) Market.
Later, the rupee hovered in a range of 61.70 per dollar and 61.99 per dollar before ending at 61.75 per dollar, showing a gain of 22 paise or 0.36%. This is its best closing since 61.69 on February 6. The domestic currency has gained by 56 paise or 0.90% in the three days.
Veracity Group, CEO, Pramit Brahmbhatt said: "Thursday also the rupee continued to appreciate on corporate inflows. Exporters too were seen selling the dollars at higher levels which supported the rupee in spite of the weak local markets." The dollar index is also trading weak which further supported the rupee.
"RBI likely bought dollars earlier in the session via state-run banks to keep rupee's gains in check," said Admisi Forex India, Pvt Ltd, Director, Suresh Nair.
Indian markets Thursday logged their worst daily drop in two weeks with benchmark Sensex tumbling 261 points to 28,746.65 and Nifty slipping over 83 points to below 8,700 mark after the first full Railway Budget of the Modi government disappointed market participants.
Crude oil prices fell in Asia on Thursday but losses were curtailed as dealers focused on positive elements of a mixed US energy stockpiles report, analysts said.
In the New York market, the US dollar inched lower against its main trading partners Wednesday, after reports said Federal Reserve chief Janet Yellen has suggested that the central bank isn't ready to raise interest rates.
The forward premia ended mixed Thursday in view of uneven buying and selling transactions. The benchmark six-month premium payable in July moved down to 204-206 paise from Wednesday's level of 204.5-260.5 paise while forward contracts maturing in January 2016 rose to 427.5-429.5 paise
from 422.5-424.5 paise. The Reserve Bank of India fixed the reference rate for dollar at 61.9395 and for Euro at 70.3880.
The rupee recovered against the pound to 95.82 per pound from 96.07 previously and firmed up further against the euro to 70.12 from 70.30 paise Wednesday. It also moved up to 51.99 per 100 yen from 52.16 Wednesday.